Why The GOP's Favorite Anti-Obama Chart Is Complete Nonsense

Once again, conservatives are using today's jobs number as a
jumping-off point to slam Obama.

Our pal Jim Pethokoukis at AEI takes the opportunity
to remind everyone that the unemployment rate — of 8.3 percent —
remains well above where The White House predicted it would be
with the stimulus, back in 2009.

Now, just to understand what's going on here, the light blue line
represents what The White House thought the arc of job creation
would look like without the stimulus. The Dark Blue Line
represents what the White House predicted the jobs trajectory
would look like WITH the stimulus.

The latest jobs report from this morning is identified with the
red dot showing current 8.3 percent unemployment, which is far
worse than where the Administration predicted it would be.

In the fourth quarter of 2008, which immediately followed the
2008 financial crisis, economic activity fell sharply. BEA’s
initial, or
“advance” estimate of GDP for the quarter, which was
released on January 30, 2009, showed a decrease of 3.8 percent at
an annual rate. In the
second estimate, which was released on February 27, 2009, the
revised estimate showed a decrease of 6.2 percent. Since then,
the estimate has been revised several more times (in March 2009,
July 2009, July 2010, and July 2011), and the
latest estimate shows a decrease of 8.9 percent.

Get that? Even after Romer's chart, it only looked like GDP had
contracted by 3.8 percent in the previous quarter.

It turns out, GDP was contracting at 8.9 percent — massively more
than anyone realized at the time.

Romer was working off very imperfect data. If even the BEA didn't
realize how bad the economy was until July 2011 — over two years
after the original stimulus — then Romer could have had no clue.

And this matters a lot. If stimulus works by
filling the demand "hole," then it's a really big deal that the
hole was nearly three times as big as anyone thought at the time.

So this endlessly hammering Romer and The White House over this
chart makes for good politics, but it is misleading. It doesn't
show that the stimulus failed, it shows that nobody realized how
bad things were at the time, and perhaps it even unwittingly
makes the case that the problem was that the stimulus wasn't
nearly big enough.